Chinese sentenced for military data theft

Case highlights growing U.S. concern about 'insider threats'

NEWARK, NEW JERSEY – Measured in millimeters, the tiny device was designed to allow drones, missiles and rockets to hit targets without satellite guidance. An advanced version was being developed secretly for the U.S. military by a small company and L-3 Communications, a major defense contractor.

On Monday, Sixing Liu, a Chinese citizen who worked at L-3′s space and navigation division, was sentenced in federal court to five years and 10 months for taking thousands of files about the device, called a disk resonator gyroscope, and other defense systems to China in violation of a U.S. arms embargo.

The case illustrates what the FBI calls a growing “insider threat” that hasn’t drawn as much attention as Chinese cyber-operations. But U.S. authorities warned that this type of espionage can be just as damaging to national security and American business.

“The reason this technology is on the State Department munitions list, and controlled . . . is it can navigate, control and position missiles, aircraft, drones, bombs, lasers and targets very accurately,” said David Smukowski, president of Sensors in Motion, the small company in Bellevue, Washington state, developing the technology with L-3. “While it saves lives, it can also be very strategic. It is rocket science.”

Smukowski estimated that the loss of this tiny piece of technology alone could ultimately cost the U.S. military hundreds of millions of dollars.

In the past four years, nearly 100 individual or corporate defendants have been charged by the Justice Department with stealing trade secrets or classified information for Chinese entities or exporting military or dual-use technology to China, according to court records. A number of other cases involving China remain under seal, according to the Justice Department.

The targets of all this theft are some of the biggest and best-known U.S. defense contractors and private companies, with household names such as Northrup Grumann, Boeing, General Dynamics, Ford, DuPont and Dow Chemical.

“America is a global leader in the development of military technologies and, as such, it has become a leading target for the theft and illicit transfer of such technologies,” said John Carlin, acting assistant attorney general for national security. “These schemes represent a threat to our national security. The intelligence community has assessed China to be among the most aggressive collectors of sensitive U.S. information and technologies and our criminal prosecutions across the country reflect that assessment.”

Earlier this month, a Chinese citizen who worked as a contractor at NASA’s Langley Research Center was arrested at Dulles Airport in Virginia and charged with making false statements to federal agents about the laptop and SIM card he was carrying. According to an FBI affidavit, the suspect, Bo Jiang, 31, had taken a NASA laptop that contained sensitive information on a previous trip to China.

Following the arrest, Maj. Gen. Charles Bolden, the NASA administrator, told a House committee that he was limiting access to NASA for the citizens of several countries, including China, pending a full security review.

In a classic espionage case, a 59-year-old former army defense contractor in Hawaii was charged this month with passing classified information to his 27-year-old Chinese lover whom he first met at a military conference.

Benjamin Pierce Bishop, a former army officer with a top-secret security clearance, worked at U.S. Pacific Command as a contractor. He is accused of turning over information about nuclear weapons, missile defense and radar systems. The woman may have attended the conference “to target individuals . . . who work with and have access to U.S. classified information,” according to an FBI affidavit.

Last year, the FBI began a public campaign to alert the defense industry and other businesses to the insider threat. As part of the effort, billboards were placed along commuter corridors near nine leading research centers.

C. Frank Figliuzzi, the former head of the FBI’s Counterintelligence Division, told Congress last year that perhaps the most important measure against the theft of proprietary information “is identifying and taking defensive measures against employees.”

Liu, who holds a doctorate in electrical engineering, came to the United States in 1993 and held a series of jobs at Bandag and Primex, tire manufacturers, and John Deere. In 2009, he went to work at L-3′s space and navigation division in northern New Jersey, where he was part of a team of engineers testing the technology created by Sensors in Motion, a pioneer in gyroscope-based navigation and guidance systems.

Liu made two trips to China, in 2009 and 2010, and each time he made several presentations on the technology he was working on without the permission of his employers, according to prosecutors. Before the second trip, in November 2010, Liu made an electronic archive of his work email and transferred it to his personal computer along with the entire Sensors in Motion program folder, according to court records.

Liu told his supervisor he was going on vacation to Chicago, but instead he spent more than two weeks in China, speaking at a technology conference organized by the Chinese government and Chinese universities, prosecutors said.

Federal prosecutors said that Liu was in China to use his knowledge about cutting-edge defense technology to get a job at a premier Chinese aeronautical institute. Along with thousands of proprietary documents, Liu’s computer contained a lengthy resume of 25 projects on which he had worked for L-3; each project was identified by its connection to the U.S. military, according to court records.

Liu was stopped on his return from China in November 2010 and eventually arrested in March 2011. After a jury trial, Liu was convicted last September of violating the Arms Export Control Act and possessing and transporting stolen trade secrets.

In court Wednesday, Liu, a 50-year-old father of three, including two U.S. citizens, told the judge that he did not intend to harm the United States and suggested that the case was a political prosecution.

Addressing the judge before sentencing, he said he had a message for his children, “Believe me, Daddy didn’t do anything.”

Liu’s attorney, James Tunick, interrupted his client’s rambling speech several times, apparently to get Liu to tone down assertions that the case was political. Tunick had previously argued that Liu “only revealed very limited information in China” and the downloaded documents were for the scientist’s “own personal knowledge.”

“Doctor, this is not a political prosecution,” said U.S. District Court Judge Stanley Chesler who ruled that Liu’s actions benefited the Chinese government. He noted that Liu downloaded documents for programs in which he had no involvement, though the judge said Liu knew “just how sensitive the material he had was.”

When FBI agents raided Liu’s house in March 2011, they found proprietary material from Bandag, Primex and John Deere as well as L-3. “We believe Sixing Liu was a serial thief,” said Assistant U.S. Attorney Judson Welle, who had asked for an eight-year sentence.